DOJ to review ‘competitive concerns’ with music-fee licensing system

Could major changes be coming to music licensing rights fees, affecting companies from Warner Music Group to Pandora to Apple? It sure seems that way, based on a recent flurry of activity coming out of Washington, D.C. First, Congress introduced a new bill intended to change music copyright law, and now, the Department of Justice (DOJ) has jumped into the fray, beginning to review the decades-old music fee system.

On June 4, the DOJ’s Antitrust Division announced a review of the fee to “address competitive concerns” with the rise in new technology. Thanks to streaming music services such as Pandora, Spotify and others, music artists are seeing income from a variety of new sources, not just (declining) record sales.

As a result, consent decrees — originally issued in 1941 — mandating that performing-rights organizations American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI) license music to anyone willing to pay set fees may be outdated.

“The Department understands that ASCAP, BMI and some other firms in the music industry believe that the Consent Decrees need to be modified to account for changes in how music is delivered to and experienced by listeners,” the DOJ said in a release. “The Department’s review will explore whether the Consent Decrees should be modified and, if so, what modifications would be appropriate.”

ASCAP’s deal with the government was last amended in 2001, and BMI’s deal with the government was last amended in 1994. Both of these deals came before advances in modern technology, such as Apple’s iTunes store. As noted by the Wall Street Journal, many rights holders, such as Apple, conduct deals directly with rights holders instead.

Many expect wholesale changes to be made, not the least of which being ASCAP and BMI themselves. “We want to be guided by rules written for today's environment, not a world of three networks, vinyl LPs or 8-track tapes,” said BMI CEO Michael O'Neill in a statement. The WSJ also says that ASCAP and BMI would prefer that the DOJ scrap the consent decrees altogether, but their proposals within this new review will be smaller in scope.

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